[DAC] Possible financial focus for the next few months

[xeroc]

@xeroc
Would you explain why the committee is aiming to give in to bitcrab's demands, instead of making sure that all other options are considered first?
And by giving in to his demands I mean proposing anything lower than the current $0.10 as the flat transfer rate.
Who made the decision that transfers are no longer part of the referral program? I have not seen any discussion about it at all.

Transfers are still part of the referral program. They just pay less
into it. Given that the "transfer" operation as well as the trading
operations represent a core functionality of BitShares that have quite
some competition, the idea was to reduce those to attract some new basic
members and encourage them to stay and provide the so needed liquidity
and usability for smartcoins.

Secondly, no final decision has been made yet and there was quite some
discussion within the committee (7 days straight). At this stage,
everything is a proposal. But we felt the need to

a) act now and not way for any hard fork to bring (even) more flexibility (e.g. bsip#10)
b) encourage outside traders to start trading within BitShares
c) encourage microtransaction businesses to look deeper into our platform.

Furthermore, no change will be implemented without asking for feedback
from the community. And to present a fee schedule that most of committee
can live with, we first developed the schedule behind the scene. You
must understand that there are quite some members around that do not
(yet) understand the full functionality of BitShares and only focus on
one particular operation fee. But we now have a proposal that seems to
fit many committee members, business and will hopefully help BitShares
to gain more traction.

Just because we propose to lower the trading flat fee and the transfer
flat fee, does not necessarily mean that we
a) give up the referral program, or
b) want no profit for BitShares itself.
En contraire. We just switched over from pricing the core features high
to pricing advanced features higher.

The committee didn't "just scetch a new fee schedule", instead every
single fee has been discussed and tweaked to fit as many entities as
possible.

And there will be a roadmap that has the purpose to give businesses some
stability so that they can run their numbers while leaving some
flexibility to tweak some fees if it turns out that they didn't result
in what we wanted them to.

Another major thing is, that we will probably agree in denoting the fees
in USD and track/change them as the valuation of BTS changes.

Even though I can't yet reveal the whole fee schedule to you, I hope it
makes sense to you.

[jakub]

That's true. What is also true is this: there are a thousand other things they could write about.

And does any of the other things pay them a penny? We do, even if it seems to be not much at first.

That's the point. We do now. But not any more *if* the new fee schedule is introduced.
What about online merchants? We don't care any more about incentivizing them?

I know this is not the right place and time to discuss this (we have to wait till the committee makes a formal announcement) but I'm very concerned about the way this whole thing is going.

A flat transfer fee below $0.05 has two very important consequences:
(1) %-based fee scheme does not make much sense any more
(2) the referral program is only targeted for the advanced-user elite

Regarding (1):
This does not seem to bother some of the committee members @BunkerChain Labs

This all seems fine.. though your worry over the % based fee has no real reasoning. I understand that it was initially sought out as a means of lower fees, however, if it doesn't get used it really won't have any negative consequence to Bitshares.

I don't get it.
So you want to spend 4m BTS on a feature that "doesn't get used" and say that "it really won't have any negative consequence to Bitshares".
And you say this as a committee member?

Regarding (2):
If the committee wants to propose a major change to the referral program (switching focus from all users to advanced users only is a major change) then this issue should be discussed first and only as a next step a substantial reduction in the flat transfer fee can be considered. Instead, what is happening now is that this new fee schedule is going to be presented, which makes this behind-the-scenes assumption that the nature of the referral program is going to change.

@xeroc
Would you explain why the committee is aiming to give in to bitcrab's demands, instead of making sure that all other options are considered first?
And by giving in to his demands I mean proposing anything lower than the current $0.10 as the flat transfer rate.
Who made the decision that transfers are no longer part of the referral program? I have not seen any discussion about it at all.

[xeroc]

That's true. What is also true is this: there are a thousand other things they could write about.

And does any of the other things pay them a penny? We do, even if it seems to be not much at first.

[jakub]

I don't see what fav is doing as a real "business".

That's interesting.

Anyway I still could argue that if they do not have resources to invest for their hosted wallet, maybe they are not so serious with their business at all.

And again, if they run blogs and make videos, there are thousand other ways to make some additional revenue from them.

Bitshares referral program can help them in both short term and long term.
That doesn't mean it has to be the only way to make a living

So in other words, we lose them - the only alternative for them is a worker proposal or a private deal with an owner of some existing hosted wallet service.
This might work for the big fish but all the little fish is lost.

And again, if they run blogs and make videos, there are thousand other ways to make some additional revenue from them.

That's true. What is also true is this: there are a thousand other things they could write about.

[Bhuz]

Businesses should never found their success, win, and revenue merely on referral system. It can be a plus for sure, but not the backbone.

@Bhuz
One more issue has crossed my mind: what is your proposal for people like fav or Max Wright?
They run blogs and make educational videos but don't have the resources to run their own hosted wallet service.
The majority of their audience does not include advanced users.

What is your solution for them?

I don't see what fav is doing as a real "business".

Anyway I still could argue that if they do not have resources to invest for their hosted wallet, maybe they are not so serious with their business at all.

And again, if they run blogs and make videos, there are thousand other ways to make some additional revenue from them.

Bitshares referral program can help them in both short term and long term.
That doesn't mean it has to be the only way to make a living

[jakub]

Businesses should never found their success, win, and revenue merely on referral system. It can be a plus for sure, but not the backbone.

@Bhuz
One more issue has crossed my mind: what is your proposal for people like fav or Max Wright?
They run blogs and make educational videos but don't have the resources to run their own hosted wallet service.
The majority of their audience does not include advanced users.

What is your solution for them?

[bitcrab]

currently the account upgrade volume is too low, about 0.3 account
everyday, if the volume grow to high enough, the "CoinHoarder's machine"
will appear, just like surely speculators will appear for arbitrage if
there are big price gap between different exchanges.

If you take a look at
http://cryptofresh.com/charts
and display the account updates, you will see that they are way more
than 0.3 per day, more like 5-10.

oh sorry I made a mistake, even based on abit's data - network got 6k BTS revenue from account update everyday, there should be at least 1.5 accounts  update everyday.

[jakub]

Also, to those who say the referral program is "wrong" because it enforces high prices while we should have low prices by default.
I agree that this is wrong, if we call this thing "the referral program". This behavior has nothing to do with referring users.

But if we call this "the subscription program" it all begins to make sense.
All major mobile companies are using this model and it works for them.

That may work for mobile compnies, but not for me. They give you free phone, but then rob you with fees. Exactly like bitshares does. That is why the choice of millions of people is unlocked phone and no commitment service.

Unfortunately, it only matters whether it works for mobile companies, not for you. You are not that important.

This issue has little to do with a phone device offered for "free". That's another matter.

I can still have my own unlocked phone, but when I use it on a pay-as-you-go basis, I pay substantially higher rates than I would, if I bought an annual subscription.

You say you have an unlocked phone and a non-commitment service.
But I'm pretty sure that with most mobile operators, you would pay lower rates, if you decided to opt for a commitment service (i.e. subscription).

[xeroc]

currently the account upgrade volume is too low, about 0.3 account
everyday, if the volume grow to high enough, the "CoinHoarder's machine"
will appear, just like surely speculators will appear for arbitrage if
there are big price gap between different exchanges.

If you take a look at
http://cryptofresh.com/charts
and display the account updates, you will see that they are way more
than 0.3 per day, more like 5-10.

[bitcrab]

he may do not want to kill, but the referral program may be really killed by him.

How to Kill Referral Businesses:
Charlie wants the referral business to die because he thinks the inflated fees are bad for the future of Bitshares. He sets up a business that works like the rakeback business in poker [1]. Anyone that signs up under him, he gives 100% of the fees back to them that he earns. It costs him very little to set this up. It mostly just costs him the time it takes to program an automated solution. Assuming everyone acts in their own self-interest, they would register for an account with Charlie as their referrer because they will save a lot of BTS on the fees. No one can compete with 100% rakeback, and all referral businesses that rely on the referral program for profit would die off.

Actually, this "Kill Referral Businesses" example proofs exactly the opposite than @CoinHoarder intended.

The facts are these:
- CoinHoarder's idea has not been executed by anyone so far.
- Not a single referral business demands protection from it.
Why is that?
Maybe because the referral businesses *believe* they are able to add some value for the user after all.

If they are wrong in this belief, the referral program will die eventually.
So why do you put so much effort into fighting the referral program, instead of simply getting rid of it (at least in your country) by executing CoinHoarder's machine?

currently the account upgrade volume is too low, about 0.3 account everyday, if the volume grow to high enough, the "CoinHoarder's machine" will appear, just like surely speculators will appear for arbitrage if there are big price gap between different exchanges.

Currently the network need to pay out 43k BTS to witnesses and 80k BTS to workers every day, but average daily income is only 8k BTS or so, among it about 900 come from transfers, 6k come from account upgrades.

no referral business demands protection from it perhaps because they are not aware of this. I believe their service provide some add-value, but the problem is, should/would they try to differentiate LTMs with different referrers? if not how can they defend their profit after the "CoinHoarder's machine" appear?

that is the flaw of the RP: it conflict with the "I pay to the service I use" principle, whether it is a continuable model is doubtful.

[yvv]

Also, to those who say the referral program is "wrong" because it enforces high prices while we should have low prices by default.
I agree that this is wrong, if we call this thing "the referral program". This behavior has nothing to do with referring users.

But if we call this "the subscription program" it all begins to make sense.
All major mobile companies are using this model and it works for them.

That may work for mobile compnies, but not for me. They give you free phone, but then rob you with fees. Exactly like bitshares does. That is why the choice of millions of people is unlocked phone and no commitment service.

[jakub]

Anyway, I don't fully understand how the network would lose 20%... the net would always take his cut, and shareholoders/committee should try to maximize his revenue.

You are right when you say the network will always take its 20% cut.
What I meant is that when the transfer fee gets really small (e.g. $0.02) a 20% cut is quite worthless.
So theoretically you are right but practically a business earns might earn its profit without sharing it with the network in any substantial way. Something like 1% of the total profit ends up going to the network.
[/quote]

Shareholders/committee can do that by requesting ltm for some operation or for some desired features (bond market and such)

These changes affect business dealing with advanced users. Most businesses will not be in this category.

This could make sense....but the 20% of the network isn't already this? A kind of subscription you have to pay to use the service?
So, how would you justify another additional 80% paid to the referrer?

If the referrer brings any value to the network than the network needs to reward him.
And the network can only reward somebody from funds that arise from fees collected from users.

So if we treat the current referral program as a combination of an actual referral program and a subscription program - then all begins to make sense.

Referrers bring value to the network -> so they need to be rewarded by the network -> the network gets revenue from the subscription program -> to reward the referrers the network offers 80% of the revenue received from the subscription program.

[Bhuz]

Regarding aspects (2) and (3) - actually, this *should* be the backbone for most "value-added" businesses (e.g. mobile apps).
And if we don't offer in-built tools for that, those businesses will start doing this on their own (e.g. kenCode is already gravitating towards this model) but this is quite unfortunate because:
- each business ends up adding a piece of functionality that should be shared across all similar businesses
- the network loses its 20% cut in the profits made by the busineses

I am not sure of fully understand your point here, so my reply could be "off-topic".

When you say that the RP should be the backbone for most value-added business...are you talking about the 20/80 split for every transaction, or the 20/80 split on account_upgrade?

I mean, are those businesses interested in keep their userbase as normal-user to have revenues from the operations-fee, or those businesses really would like to see all their users to upgrade to LTM and take the higher one-time fee from account_upgrade operation?

From what I understood reading this forum (mean: what I think ppl thinks about this), they really care about LTM-fee, so we could even have the RP working (20/80 split) "only" on the account_upgrade op?!

Anyway, I don't fully understand how the network would lose 20%... the net would always take his cut, and shareholoders/committee should try to maximize his revenue.
Shareholders/committee can do that by requesting ltm for some operation or for some desired features (bond market and such)

But if we call this "the subscription program" it all begins to make sense.
All major mobile companies are using this model and it works for them.

This could make sense....but the 20% of the network isn't already this? A kind of subscription you have to pay to use the service?
So, how would you justify another additional 80% paid to the referrer?

[xeroc]

But if we call this "the subscription program" it all begins to make sense.
All major mobile companies are using this model and it works for them.

This ^^

[jakub]

Businesses should never found their success, win, and revenue merely on referral system. It can be a plus for sure, but not the backbone.

@Bhuz
I think the source of the problem is that currently this mechanism which we call "the referral program" is trying to do too many things at the same time:
(1) incentivize attracting new users to the system
(2) offer a choice between the pay-as-go option and the subscription option
(3) give access to advanced features

If we treat the RP purely as (1) - I agree, no business should treat it as a backbone, unless this is an intentional choice of its business model. For a BitShares blogger or website this might be a reasonable choice.

Regarding aspects (2) and (3) - actually, this *should* be the backbone for most "value-added" businesses (e.g. mobile apps).
And if we don't offer in-built tools for that, those businesses will start doing this on their own (e.g. kenCode is already gravitating towards this model) but this is quite unfortunate because:
- each business ends up adding a piece of functionality that should be shared across all similar businesses
- the network loses its 20% cut in the profits made by the busineses

So ideally the current referral program should be split into those three distinct features (1), (2) and (3), and each of them should have its own price, set by the registrar and with 20% cut for the network in each case.

Also, to those who say the referral program is "wrong" because it enforces high prices while we should have low prices by default.
I agree that this is wrong, if we call this thing "the referral program". This behavior has nothing to do with referring users.

But if we call this "the subscription program" it all begins to make sense.
All major mobile companies are using this model and it works for them.